Dollar weakness drives up EUR/USD and GBP/USD while weighing on USD/JPY
While both the pound and the euro are little changed so far, the yen continues to make headway against the greenback.
EUR/USD holds firm ahead of ECB meeting
Hopes of a hawkish European Central Bank (ECB) meeting have driven EUR/USD to its highest level since early September, returning the price to the 100-day simple moving average (SMA).
The downtrend is still in place, and indeed if the ECB proves to be more cautious than expected, a reversal here could develop rapidly. This would then bring trendline support from the September low into view, and potentially back to those September lows in time.
Alternatively, the price will target $1.02 and then $1.036, the August high, in the event of additional upside.
GBP/USD back at $1.16
GBP/USD's resurrection from its September low continues, although it is arguably much more a function of dollar weakness than it is any renewed confidence in the British economy.
A one-month high for GBP/USD has seen the price push on above the 50-day SMA (currently $1.1387) for the first time since early August. However, it is still in a downtrend, so buyers may be cautious about pushing too hard on this for the time being.
A reversal back below $1.14 would likely be taken as a signal that a fresh leg lower is in progress, with trendline support from the September low likely to be tested in short order.
USD/JPY weakens for another day
Intervention by the Ministry of Finance has finally resulted in a sustained move lower for the USD/JPY, towards the 50-day SMA.
However, just as the downtrends for EUR/USD and GBP/USD are still in place for now, the uptrend here is now seriously challenged by this move. Indeed, buyers may welcome it as the first real downward move, with the potential for a higher low in due course.
Additional declines target the 50-day SMA (currently ¥143.68), and then below this down to the ¥140.00 level and the 100-day SMA (currently ¥139.54).
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